Last year, we spent time in several countries—Colombia, the Philippines, Fiji, Namibia, Ghana, Zambia and Benin—trying to understand how they can better position themselves to access funding to mitigate and adapt to climate change (See Box 2). These countries have already made considerable progress in their plans, policies, and projects to respond to climate change. However, if they are to make fundamental shifts toward climate compatible development, they need access to funding on a much bigger scale. And in order to mobilize this funding, they need to have certain enabling conditions - often referred to as “readiness”—in place.
Readiness is a hot topic for the newly established Green Climate Fund (GCF), as it heads towards its 6th Board meeting in Bali, Indonesia next week (See Box 2). At the meeting, the Board is expected to make a decision on what the GCF’s readiness program will look like. It will likely be narrow in focus, which makes sense based on its limited funding and timeframe. Yet as the GCF moves forward, it is important to remember countries’ broader readiness needs and to be flexible in finding the right institutions to channel funds in the short term.
Common Readiness Challenges
Developing countries like the seven listed above face a number of similar challenges and readiness needs. For example:
- Coordinating the many actors and agencies that work on climate change issues, and enhancing the quality and flow of information between them.
- Developing policies that incentivize investment in climate-friendly sectors.
- Training people in government, civil society and the private sector to understand and engage on climate issues.
- Keeping track of how and where climate funding is flowing.
- Strengthening the financial management capacities of institutions to meet the accountability requirements of international funds.
Overcoming these challenges can take many years of sustained effort, and should not condition investment in full scale projects and programs. But as previous WRI work has demonstrated, addressing barriers such as these can unlock climate investment on a larger scale.
Box 1: Readiness support is not new
Readiness support is not new, and many countries are already receiving such support in one form or another. WRI has engaged in a number of readiness-related initiatives in the past year:
- UNDP, UNEP and WRI are engaged on a program, funded by the German Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, to support countries to access and deploy GCF funding. We visited Colombia, Fiji, Ghana and Benin in initial scoping missions last year.
- WRI supported the Overseas Development Institute (ODI), the Africa Climate Finance Hub and GIZ to conduct a readiness needs assessment in Namibia last year, with funding from the German Ministry of Economic Cooperation and Development.
- WRI is working with Oxfam and ODI on the Adaptation Finance Accountability Initiative, which works with civil society partners in four countries to strengthen capacities for tracking funding for adaptation. We visited the Philippines and Zambia for initial scoping missions last year.
Readiness in the Green Climate Fund
The GCF is expected to become a major vehicle for channeling funding to developing countries for climate change adaptation and mitigation. In a decision at its last meeting, it recognized the importance of supporting countries to achieve “readiness,” and it has set aside an initial $30 million for this purpose.
In next week’s meeting, the GCF is expected to decide on a readiness program based fairly narrowly on four sets of activities that will help developing countries gain access to the Fund:
- Preparing a framework to align GCF support with the strategic priorities of the country (for example, drawing on existing adaptation and mitigation plans);
- Identifying a national agency to coordinate country engagement with the GCF, one that will ensure consultations with all stakeholders;
- Identifying and preparing institutions (such as ministries, NGOs, development banks, or others) to meet the GCF’s requirements on financial management and environmental and social safeguards, thereby allowing direct access to the Fund;
- Getting a head start on project or program proposals now, so that they can be submitted quickly to the GCF for funding once it is fully operational.
From our experience of engaging with a range of developing countries on the question of readiness, two main messages stand out that those at the GCF meeting should keep in mind.
Box 2: Everyone’s talking about readiness
WRI and the Asian Development Bank are co-organising two events with a focus on readiness in the lead up to the GCF meeting:
The Asia-Pacific Regional Dialogue on the GCF, (February 14-15 in Singapore) is an annual event that brings together diverse stakeholders from the region, including GCF Board Members, to discuss key issues for the GCF. This year, the first day will focus on climate finance readiness.
A workshop on the GCF’s Readiness and Preparatory Support, (February 17 in Bali, Indonesia) provides a platform for various stakeholders and GCF Board Members to discuss the GCF’s work program on readiness.
Don’t lose track of the broader goal
By keeping its readiness program narrowly focused on helping countries gain access to the Fund, the GCF can ensure that its limited readiness funding addresses the most immediate needs. However, the GCF should not lose track of developing countries’ broader readiness needs described above, such as training, tracking funding, and creating incentives for climate-friendly investment.
If it is to be transformational in putting countries on a low carbon, climate resilient development path, the GCF will need to fund projects and programs that create readiness through its main funding windows too. Such activities may include preparing a new national policy or law on climate change; strengthening the know-how of small businesses or local banks to prepare and finance clean energy projects; or launching a public awareness campaign about the benefits of energy efficiency.
Allow flexibility in the range of institutions that can provide readiness support
Once it is fully operational, the GCF will require countries to access its funds through institutions (which may be international or national) that have been through a rigorous process of accreditation. But as its readiness program will get under way before the accreditation process begins, the GCF will need to find another way of channeling funds in the interim. Our hope is that the GCF will allow flexibility in the kinds of institutions that could fill this role. In some cases, national institutions may have the expertise and ability to provide readiness support, even though they have not yet been accredited. In other cases, countries may be already receiving readiness support from other institutions (See Box 2). The GCF should coordinate its support with that of other national and international institutions and programs, so that it does not duplicate effort but rather addresses the key gaps and needs of the country.
Creating the enabling conditions to mobilize funding on a large scale and to move countries onto a low-carbon, climate resilient development path will not happen overnight. It takes years of sustained investment and effort on the part of developing countries and international funders. Developing countries need to be in the drivers’ seat in making this transformation happen. By supporting readiness in a country-driven, coordinated and holistic manner, the GCF can play a pivotal role in supporting developing countries to achieve their climate ambitions.